On Jan 1, Year 1, White Co grants its three top employees, Mr. Blue, Ms. Orange, and Mrs. Green, 3,000 options each to purchase its $10-par common stock. Each option allows the purchase of 10 shares at $25 per share during Years 3 and 4. In order for these options to be exercisable, each of the top employees must demonstrate a high level of performance during years 1 and 2. The fair market value of these options was $90,000. At that grant date, Mr. Blue declined the offer. How much will White record for compensation expense each year for years 1 and 2?

On Jan 1, Year 1, White Co grants its three top employees, Mr. Blue, Ms. Orange, and Mrs. Green, 3,000 options each to purchase its $10-par common stock. Each option allows the purchase of 10 shares at $25 per share during Years 3 and 4. In order for these options to be exercisable, each of the top employees must demonstrate a high level of performance during years 1 and 2. The fair market value of these options was $90,000. At that grant date, Mr. Blue declined the offer. How much will White record for compensation expense each year for years 1 and 2?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 8RE: On January 2, 2019, Brust Corporation grants its new CFO 2,000 restricted share units. Each of the...

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On January 2, 2019, Brust Corporation grants its new CFO 2,000 restricted share units. Each of the time-vested restricted share units entitles the CFO to receive one share of Brust common stock if she remains an employee of the company for 4 years. On January 2, 2019, shares of Brusts 1 par value common are trading at 29.50 per share. The company estimates that the CFO will complete all 4 years of required service with the company. Prepare the journal that Brust should make each year to account for the restricted share units.
Carmichael Co. adopted a stock option plan for its top executives. Under the plan, each option granted would allow an executive to purchase one share of Carmichael’s $10 par valuecommon stock for $40 per share. On January 1, 2020, Carmichael granted the executives 60,000 options. The options were non-transferable and the executive had to remain an employee of the company to exercise the options. The options were exercisable within a 2-year period beginning on January 1, 2022. It is assumed that the options were for services performed equally in 2020 and 2021. The Black-Scholes option pricing model determines total compensation expense to be $1,200,000.On July 1, 2022, 45,000 options were exercised. Required: Based on the information above, prepare the entries required from January 1, 2020, through July 1, 2022.
Concord Company establishes a stock-appreciation rights program that entitles its new president Ben Davis to receive cash for the difference between the market price of the stock and a pre-established price of $33 (also market price) on December 31, 2021, on 37,700 SARs. The date of grant is December 31, 2021, and the required employment (service) period is 4 years. President Davis exercises all of the SARS in 2027. The fair value of the SARS is estimated to be $6 per SAR on December 31, 2022; $10 on December 31, 2023; $14 on December 31, 2024; $6 on December 31, 2025; and $17 on December 31, 2026. (a) Prepare a 5-year (2022-2026) schedule of compensation expense pertaining to the 37,700 SARS granted president Davis. (If the compensation decreases from prior year enter the amount as a negative number in the table eg -25,000 or (25,000)) Cumulative Compensation Recognizable Date 12/31/22 $ 12/31/23 12/31/24 12/31/25 Fair Value Percentage Accrued % $ Compens
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On January 1, 2024, Cori Ander Herbs granted restricted stock units (RSUs) representing 300,000 of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $13 per share on the grant date. At the date of grant, the company anticipated that 5% of the recipients would leave the firm prior to vesting. In 2025, 1% of the options are forfeited due to executive turnover. The company chooses the option not to estimate forfeitures. What amount should the company record as compensation expense for the year ended December 31, 2025?
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On January 1, 2022, Jade Corporation granted share options to each of the 300 employees working in the sales department. The share options vest at the end of a three-year period provided that the employees remain in the entity’s employ and provided the volume of sales will increase by more than 10% per year. The fair value of each share option on grant date is P20. If the sales increase by more than 10%, each employee will receive 200 share options. If the sales increase by more than 15%, each employee will receive 300 share options. On December 31, 2022, the sales increased by more than 10%, and no employees have left the entity. On December 31, 2023, the sales increased by more than 15% and 20 employees left the entity. What amount of compensation expense should be recognized for 2023? 400,000 720,000 560,000 800,000
Hanshaben
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On January 1, 2022, Wildhorse Corp. granted stock options for 71000 shares of its $10 par value common stock to key employees. The market price of the common stock on that date was $23 per share and the option price was $20. The Black-Scholes option pricing model determined total compensation expense to be $636000. The options are exercisable beginning January 1, 2025, provided those key employees are still in Wildhorse's employ at the time. The options expire on January 1, 2026. The amount of compensation expense Wildhorse should record for 2024 under the fair value method is O $0. O $318000. O $106000. O $212000.
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